Could this lead to people intentionally violating terms to try to get their account terminated so that they can get money back for every in app purchase, etc, they've ever made?
Yes which is why this won't ever happen. It should just be illegal to wholly terminate an account. If someone is breaking ToS, ban them from doing the ToS breaking thing like posting or commenting. No reason to terminate the entire account.
This is, in general, Valve's approach with Steam users. A user cheats on servers using Valve Anti-Cheat? Banned from all of those servers, but not from the games themselves. A user spams heinous garbage in the forums? Banned from posting in the forums. I think one of the only things that will actually get an entire account disabled is charging back a purchase.
